Thinking about health

By Trudy Lieberman, Rural Health News Service

What you need to know about choosing health insurance

Even though the election is over and Republicans are in a position to repeal and replace Obamacare as they’ve been vowing to do for several years, that doesn’t mean you should avoid signing up for 2017 insurance coverage.

If you’re eligible and need insurance, the state shopping exchanges are open for business even if options this year are limited in many counties, particularly in rural areas. More than 40 percent of the counties where residents can buy an Obamacare policy have just one insurer selling them. That’s not a lot of choice, and policies that are offered are likely to have high premiums and limited options for doctors and hospitals.

Still, some careful shopping is in order to minimize any surprise bills. After the election, White House Press Secretary Josh Earnest urged Americans to sign up and announced “the vast majority” of eligible consumers would be able to buy insurance for a monthly premium of $75 or less, which has been the administration’s sales pitch.

Assuming the White House math is correct, that doesn’t mean the vast majority should automatically buy a policy with a $75 premium. That strategy can mean expensive trouble later on. Reviewing the basics before wading into the Obamacare marketplace this year is essential.

For starters, recall that platinum policies, generally the most costly, cover 90 percent of someone’s medical costs; gold plans cover 80 percent; silver plans pay 70 percent; and the bronze variety pays the least – only 60 percent of a patient’s healthcare expenses. Silver plans have been the most popular, largely because those who buy them and have family incomes below $60,750 get extra government subsidies to help pay their deductibles, copays and coinsurance.

Bronze policies are popular, too, because they have low premiums, but people buying those policies won’t get the extra subsidies, a point that’s worth remembering. Those subsidies can be a big help if you need a lot of medical services. Both bronze and silver policies generally come with lower monthly premiums, but that doesn’t mean they are cheaper in the long run.

Here’s where comparison shopping gets tricky. It’s possible a bronze policy and maybe a silver one could end up costing more than a gold one with a higher premium if you get sick. That’s because of the relationship between the premium, copays, coinsurance and deductibles. Insurers mix and match these features to fit their marketing strategy.

In general, a lower premium means higher deductibles and higher other out-of-pocket expenses. A policy with a higher premium often means lower out-of-pocket costs.

For 2017, the maximum amount a family would have to pay out-of-pocket for copays, coinsurance and deductibles is $14,300. That’s a lot of money and enough to deter some people from signing up. Many people say paying that much before insurance pays isn’t really insurance. It’s also high enough to keep people from seeking medical care even when they need it. If people go to the doctor less, the country’s national health expenditures will drop – at least that’s the rationale for the high out-of-pocket limit.

An Indiana couple I’ve written about before in this column recently sent an email updating me on the family’s insurance options for next year. Their carrier had increased their $836 monthly premium to about $1,300; their cost even after an Obamacare tax subsidy was applied. What’s more, the reader said, the insurer had raised the amount of coinsurance for hospitalizations from 20 percent to 50 percent.

Given how much a hospital stay costs, they worried they’d be on the hook for a lot of money until they reached the $14,300 out-of-pocket maximum. It was a risk they weren’t willing to take, and they shopped until they found new coverage for only $700 a month with their subsidy.

Choosing an Obamacare policy or any other insurance coverage comes down to how much risk you want to assume. If you are reasonably certain you won’t need many medical services, you may want to take a chance and buy less expensive insurance that comes with high deductibles, copays and coinsurance.

But if you’re like the Indiana couple, and afraid of high expenses for unexpected medical care, buy the best policy you can afford that reduces that risk.

Another thing to keep in mind! Beware of policies with really low premiums, prices that seem too good to be true. Consumers who bought insurance from the Obamacare co-ops learned that.

Almost all of the 23 co-ops authorized to compete with the big carriers have gone out of business. They priced their policies too low, and too many sick people signed up. Government regulators closed them down, sending thousands of people scrambling for new coverage – an unwelcome chore for anyone.

What have your experiences been shopping for insurance? Write to Trudy at trudy.lieberman@gmail.com.